Can Richard Desmond save Channel Five?

Richard Desmond bought Channel Five for £103.5 million on Friday afternoon, adding to his media empire which includes the Daily Express, the Daily Star and OK! magazine.  He summarised his plans just two hours after acquiring the channel: “All we are going to do is add more programmes, and put extra money on screen… Five is going to be huge.”

Since then, he has announced a more informative £1 billion plan for Channel Five, as he wants it to be called, which aims to entice advertisers with an alternative to so-called “arrogant and monopolistic” ITV. Desmond aims to increase Five’s share of advertising significantly, doubling it from 7% to 14%. He predicts that each percentage gain could add £43 million to the top line.

Five cannot promote Desmond’s newspapers, due to European rules; however, the channel can be given as much free publicity as he chooses in his newspapers and magazines. From this week, Five will be advertised heavily in OK! magazine and the Daily Star, spending £20 million a year with them.

Desmond has also promised a £100 million investment in programming: “We want to show programmes that people watch.”

Jim Marshall, chief client officer at Aegis and regular MediaTel columnist, says: “I wouldn’t like to predict how he is going to shape the channel for the future, either in terms of its programme schedule or its digital development. However I can confidently predict that he will ‘ruffle a lot of feathers’, particularly of the existing broadcast fraternity and regulators, which will be fun – as long as you’re not in the direct firing line! I also have a suspicion that he will confound his critics by making it profitable even if it doesn’t win too many Baftas.”

What we do know is that there have been talks of bringing back shows such as Top of the Pops, and buying the rights to reality show Big Brother (which is running for the final time on Channel 4 this summer). However, Desmond claims that Dawn Airey, Five’s chief executive, will make any final decisions. “At the end of the day, I let my editors edit, the same way the programmer will decide what will go on air”.

Desmond has already assured Ofcom that Five will continue to broadcast news and current affairs, in order to abide by the terms of its terrestrial licence, as well as pledging to continue with deals for shows including CSI and Neighbours.

He has also indicated that he is willing to pay the £16 million required for Five to return to video-on-demand joint venture Project Canvas, which the channel pulled out of earlier this month due to financial problems.

However, despite assurances and promises, staff at Five are fearing the arrival of a cost-cutting Desmond, the same man who massively cut down on expenditure at the Daily Express and relocated sub-editors to Lancashire.

Looking at Desmond’s newspaper investments, around 664,000 people still buy the Daily Express every day and over 550,000 buy the Sunday Express. The Daily Star has increased in circulation by 200,000 readers, in just under a decade. He is said to have simply cut costs including jobs, but he has been successful enough to take many millions out of the business.

Even without this track record, Desmond’s large injection of money into Five does appear to offer some hope for the channel that never took off in the way that other channels managed. Posting an operating loss of €41 million last year, the low value of Five was highlighted during the sale; the next highest offer after Desmond’s bid was less than £50 million. Clearly this is a channel that needs changes to be made.

But is Desmond the man to provide these changes? Enders Analysis’ Toby Syfret, quoted in The Guardian, doesn’t think so – “unless he has the vision of somehow being able to find the golden ticket and make relatively low-cost programming with popular appeal. That is the conundrum. Maybe he’s seen something that has been beyond the wit of RTL to find. It’s just difficult to imagine what it might be.”

Whether Desmond has ‘the golden ticket’ or not is something that only time, and a lot of investment, will tell. Either way, with the ‘half a trillion’ ideas that Desmond states he has for Channel Five, it sounds like it’ll be an interesting ride.

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